UK Royal Mail 'still talking about rail'

Allan Leighton, chairman of Royal Mail, will today tell MPs that the postal organisation is talking to seven potential suppliers about continuing to transport mail on the railways.

The Royal Mail scandalised unions and environmental groups in June by concluding that air and road were cheaper options for delivering post, and that the network’s mail-train services will stop by the end of next March. This was despite the fact that it had signed a 10-year contract for its rail services, ending in 2006.

Speaking before the Transport Select Committee today, Mr Leighton will say that the decision to stop using rail was taken after the failure of negotiations with EWS, Royal Mail’s freight supplier, over the transfer of existing services to a new network.

He will tell members of the committee that the final quotations from EWS cost £25.9m a year more than the road-only transport solution.

However, he will also add that using the railways for some mail delivery is a preferred strategic option for the organisation, and that discussions with other suppliers continue.

Not using the railways, he will say, was a commercial rather than a policy decision, and the company has not ruled out a return to rail services.

Before the decision to stop transporting mail on trains was taken, Royal Mail was moving 14pc of its letters long distance on the railways. The organisation was operating 60 trains every night. Mr Leighton will say that he is disappointed that after two years of discussion with EWS that the freight group could not quote a competitive price for the revised service.

EWS is the leading rail freight operator in the UK, and it runs 1,500 rail freight services every weekday.

Royal Mail is under pressure from its regulator, which sets performance targets, to send its mail on time. Recently it was fined for not improving performance on some of its services.